All Industry Rates (AIR) of Duty Drawback and Status

Businesses wishing to remain competitive in the world of international trade know that managing costs is key. Duty Drawback is one of the effective ways an exporter can cut down his costs. For example, All Industry Rates (AIR) of Duty Drawback provides, on a standardised basis, to varying industries to recollect duties paid on imported materials used to make goods for export.

In this article, we break down the AIR of Duty Drawback, explaining what it is, how it is calculated, what the benefits of claiming are, how to claim, and where we stand today. New to exporting, or want to maximize your financial strategies? Air of Duty Drawback can enhance your business's profitability.

What is the All Industry Rates (AIR) of Duty Drawback?

All Industry Rates Duty Drawback is a government scheme established for all exporters to be able to claim a part of the customs duties on the imports in respect of such goods, which are then utilized for manufacturing the exported products. It is provided under Section 75 of the Customs Act, 1962, and Section 37 of the Central Excise Act, 1944, and is governed by the Customs and Central Excise Duties Drawback Rules, 2017.

Companies import raw materials and pay customs duties on them brought in for the manufacture of goods for export. The AIR of the Duty Drawback claims some of those duties to reduce themselves. The corresponding rates and descriptions for the responsibilities can be matched to the First Schedule to the Customs Tariff Act, 1975 since all industries are concerned about the fact. Drawback rates are either a percentage of the Free on-board (FOB) value of the exported goods or represent a rate on a per-unit basis.

Calculation of AIR in Duty Drawback

Calculating All Industry Rates for Duty Drawback is relatively easy if you can follow these steps:

Find the FOB Value: The very first step while going through this procedure will be finding the Free on-board (FOB) value of export goods. This value denotes the complete values of goods at the point of export.
Find the Drawback Rate: Find out the drawback rate for your product in the First Schedule to the Customs Tariff Act, 1975. These rates are more product-specific under different classifications.
Apply the Drawback Rate: Multiply the FOB value by the drawback rate applicable to it. Thus, if your FOB value is ₹1,000,000 and the drawback is at 10%, then you have ₹100,000 payable.
Also Include Packing Materials: Packing materials, unless excluded as such, used for the export of your goods will also be considered in the calculation, which can further increase the amount of the recoverable.
Exclusion Adjustment: This will ensure that your goods are not included in any currently excluded categories, like those that are manufactured in bonded warehouses or under Export-Oriented Units (EOUs), Special Economic Zones (SEZs), or Foreign Trade Zones (FTZs).

Following these steps, you can calculate the AIR of Duty Drawback and know how much you can reclaim as a duty.

Benefits of AIR in Duty Drawback Scheme

AIR has brought many benefits to every exporter under the Duty Drawback scheme-

Cost Reduction: Duty reclamation on the journey of imports brings the overall expenditure down for the profitability of businesses, again saving and investing within them.

Improved Profit Margins: Input expenses decrease, directly affecting profit margins and making the products more profitable even in the most challenging competition situations.

Cash Flow Improvement: Cash inflow is enhanced through the recovery of the duty paid, which provides extra money for different essential business activities such as production planning or entry into new markets.

Greater Competitiveness: These reduced costs enable offering more competitive prices in international markets, thus giving you a larger market share.

Motivation Exports: Duty Drawback incentives encourage firms to indulge themselves in export activities, speeding up economic activity and translating foreign exchange into the coffers of the country's economy.

Flexibility Across Industry: Standard rates across these industries have resulted in many industries enjoying the scheme's breadth and scope.

Claims Made Easy: Clear and structured rates of duty drawback claim procedure explain the entire exercise, resulting in government benefits without complexities yet with compliance simplicities.

In total, the AIR of Duty Drawback scheme makes it possible for every exporter to increase his financial performance to remain competitive in the global marketplace.

Procedure for Claiming Duty Drawback

The All Industry Rates (AIR) of duty drawback are claimed through several steps. Here's a simple guide to help you All Industry Rates (AIR) of Duty Drawback Process.

Check Eligibility: Be sure you have exported goods that qualify for duty drawback. Goods cleared from bonded warehouses, exports under Advance Authorisation or Duty-Free Import Authorisation, and output from EOUs, SEZs, or FTZs are excluded from this.

Gather Documentation: All the required documents, including tax invoices, export bills, import documents, etc., must be collected. Documentation is essential in the claim; therefore, it must be accurate and complete.

Classify Your Goods: Make sure that you correctly classify your exported goods in accordance with the First Schedule to the Customs Tariff Act, 1975. Applicable drawback rates can be determined from the six-digit or eight-digit classification.

Calculate the Drawback: You can work out how much you can get back using the AIR rates. Multiply the drawback rate on the FOB value or per unit and, where applicable, on packing material.

Submit the Claim: You can file your duty drawback electronically to the official customs portal. Be sure to refer to the tariff items and description as per the schedule.

Follow Procedural Rules: Accordingly, you have to comply with rules 12, 1,3 and 14 of the Customs and Central Excise Duties Drawback Rules, 2017. These rules describe how a claim has to be submitted, verified, and approved.

Verification and Approval: Once submitted, they'll confirm your claim against the various conditions. It makes sure to approve only eligible claims.

Receive the Rebate: After approval, you receive the amount of duty drawback as either a credit to your bank account or as a reduction in your future duty liabilities.

Track Your Claim: You will then be able to monitor the status of your claim by using the customs portal. It's helpful to keep track so things can be resolved and resolved in a timely manner.

Stay Updated: Check to see how the latest AIR of Duty Drawback rates or regulations have changed. The new classifications and rate adjustments were released on October 30, 2023, under the scheme.

With these steps, claim the AIR of Duty Drawback easily and get reduced costs on your exported goods.

Recommended: How to start an import-export business 

Conclusion

Duty Drawback All Industry Rates (AIR) scheme for exporters is helpful to reduce their costs and thereby increase competitiveness in their international trading. However, through the AIR framework, businesses can recapture a percentage of the duties they pay on imported materials that go into producing goods to be exported.
This streamlined process, along with standard rates, enables many industries to enter this claim process, and exporters can optimize their benefits through this easy method. The AIR of Duty Drawback is something to understand and use to enhance your export business's sustainability and growth.

Frequently Asked Questions

What is the AIR of Duty Drawback?

AIR of Duty Drawback is a government scheme that allows exporters to claim back part of the customs duties paid on imported items used in manufacturing exported goods. It is Tracked under Customs and Central Excise Duties Drawback Rules, 2017, and is applicable in all industries as per a standardised rate to help businesses cut costs and increase their profits.

How to check duty drawback rates online?

You can check the duty drawback rate online either at the official website of the Central Board of Indirect Taxes and Customs (CBIC) or the official customs portal. These platforms contain information on drawback cost in terms of product classification as per the First Schedule of Customs Tariff Act, 1975.

What is the time limit for payment of the drawback?

The time limit for receiving the duty drawback is typically within six months from the date of export of the goods. However, this period may vary depending on specific regulations and the nature of the exported goods.

How is the DBK rate calculated?

The DBK (Drawback) rate is calculated as a percentage of the Free on-board (FOB) value of the exported goods or on a per-unit basis, depending on the specific provisions for each product category. If the cap is not specified, the drawback will be allowed for up to 1.5 times the value of the invoice for the given ad valorem rate. Determining the correct DBK amount depends on accurate classification and application of the appropriate rate.